15
Apr
16

Switzerland widens its enquiries into Malaysia’s 1MDB – Economist

Switzerland widens its enquiries into Malaysia’s 1MDB

EARLIER this year authorities in Switzerland said they had begun criminal investigations into two former officials at 1MDB—a Malaysian state investment firm from which they believe some $4 billion may have been misappropriated through a series of deals struck between 2009 and 2013. On April 12th the Swiss said the scope of their enquiries was widening, and that they have now also opened files on two former public officials from the United Arab Emirates.

This latest escalation relates to a deal struck in 2012, in which IPIC, an Abu Dhabi state fund, agreed to guarantee bonds raised by 1MDB to purchase two power firms. 1MDB paid billions of dollars in collateral (and other monies linked to the guarantee) to a company registered in the British Virgin Islands, which bore a similar name to one of IPIC’s subsidiaries. But on April 11th IPIC issued a statement to the London Stock Exchange confirming rumours that it did not own the firm.

The Swiss investigators say they have reason to suspect that instead of going to IPIC the sums benefited the two Emirati public officials it is investigating, as well as “a company related to the motion picture industry”. In early April the Wall Street Journal reported that investigators in two countries believe more than $150m originating from 1MDB found its way to Red Granite Pictures, a film-production company co-founded by the stepson of Malaysia’s prime minister, Najib Razak. This firm subsequently financed “The Wolf of Wall Street”, a Hollywood film about a hedonistic crook, starring Leonardo DiCaprio.

Red Granite denies any wrongdoing and says it is co-operating with enquiries. 1MDB says it finds IPIC’s claim not to have benefited from its payments “surprising”, and says it has not given money to Red Granite. Swiss authorities note that the two Emiratis under investigation, like all defendants, are “presumed innocent”.

The Swiss attorney-general’s statement comes days after the release of a long-awaited report into 1MDB’s affairs, produced by MPs on Malaysia’s public-accounts committee. That enquiry was temporarily suspended last summer when Mr Najib promoted several of the committee’s members to the cabinet. The report identifies irregularities in several large transactions, though it stops short of alleging outright fraud. Tony Pua, an opposition lawmaker and one of the report’s authors, regrets that 1MDB was unable to provide the committee with all the documentation it requested.

…more
Switzerland widens its enquiries into Malaysia’s 1MDB
One of the biggest controversies in Malaysian political history gets bigger
Apr 14th 2016 – The Economist

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